Floating loss is your unrealised loss — the money you're down on trades that are still open, before you've closed them. It's the gap between your balance (settled, closed P&L) and your equity (balance plus or minus whatever your open positions are worth right now).
The rule here says: if your floating loss ever hits 1% of the account — that's $100 on a $10,000 account — it's a hard breach. "Hard" means it's not a warning or a soft reset; the moment equity drops $100 below balance on open trades, the account is failed/terminated on the spot. It doesn't matter whether the trade would have come back to profit a minute later — the breach is triggered live, in real time, on the floating number.
The key distinction: this rule watches your equity while trades are open, not your closed results. You can end the day green and still have breached earlier if a position dipped too far intraday.
Note - The 1% Floating Loss Rule is an additional risk management rule and applies independently of the 3% Daily Drawdown and 5% Trailing End-of-Day Maximum Drawdown. All three rules must be respected at all times.
For example;
Balance: $10,000
Same start, but this time you let the position run against you:
Open trade at −$40 → equity $9,960 (0.4% floating)
Deepens to −$85 → equity $9,915 (0.85% floating) — one bad tick from the edge
Price spikes and the trade hits −$1,050 → equity $9,895
The instant equity touches $9,895 — a floating loss of $105, over the 1% / $100 limit — the account is hard breached. It doesn't matter that you never clicked "close," or that price reversed back to −$30 five seconds later. The rule fired on the live floating number, and the account is gone.